Pending Recission of Interest on Excess Reserves | M-006

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Rescission of Interest on Excess Reserves​

Motion No.: M-006-MAR-2026
Category: Monetary Operations
Legal Basis: Federal Reserve Act (FRA) §§ 4, 5, 6, 8, 9 & 11

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WHEREAS​

The Federal Reserve Bank of Redmont is mandated under the Federal Reserve Act to provide liquidity facilities to regulated financial institutions in order to promote stability and orderly functioning of the financial system; and

WHEREAS​

Interest on excess deposits maintained at the Federal Reserve Bank of Redmont presently serves as a monetary policy instrument influencing the liquidity preferences and reserve management practices of regulated financial institutions; and

WHEREAS​

The Federal Reserve Board has determined that continuing to pay interest on excess deposits may encourage the accumulation of idle reserves rather than their deployment into productive lending and financial intermediation; and

WHEREAS​

The Federal Reserve Board seeks to promote a more active circulation of liquidity within the financial system while maintaining orderly reserve management and institutional stability;

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NOW, THEREFORE, BE IT RESOLVED THAT​

1. Policy R-001 §10(c) is hereby rescinded in its entirety.
2. Policy M-001 §6(b) is hereby rescinded in its entirety.

Following the rescission of these provisions, the Discount (or “Bank”) Rate shall no longer apply to Excess Reserves maintained by regulated financial institutions at the Federal Reserve Bank of Redmont.

The Federal Reserve Bank of Redmont shall retain the authority to establish separate policies governing the treatment, remuneration, or non-remuneration of Reserves as may be determined by the Federal Reserve Board.

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VOTING​

This motion shall be adopted upon approval by a simple majority of the sitting members of the Federal Reserve Board.
In the event of a tie, the Secretary of the Department of Commerce shall cast the deciding vote, pursuant to the Federal Reserve Act.

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EFFECTIVE DATE​

This motion shall take effect on March 31, 2026 and shall apply to all reserves beginning the first month following its adoption.